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Career Center

Need Help Choosing Between a Career in Audit and Advisory at a Big 4 Firm?

Caleb Newquist
October 8, 2010

Since we’ve already checked out for three-day weekend and a reader needs advice ASAP, we’ll dispense with another edition of “Accounting Career Couch.” An aspiring accountant is trying to decide between joining the advisory and audit practice of a Big 4 firm but – surprise! – can’t decide since she likes both. Sigh.

Have a question about your next career move? Worried that you’re not doing enough for your clients? Need help casting a satirical political ad? Email us at advice@. Like donuts, there’s nothing we can’t do.

Back to our indecisive co-ed:

Hi Caleb:

I feel as if I am facing a small dilemma at a pivotal point in my young accounting career. I am interviewing with one of the Big 4 tomorrow and have been asked which service area I would prefer to go into: Audit or Advisory.

To be honest, with this job market, I would love either and I am 100% sure I would be a good fit for either type of position. I am very actively involved in Beta Alpha Psi and my resume is very “plump” with positive customer service experience. I posses very strong soft skills at quite a young age and have a lot of leadership experience in school and through my role in BAP. The company I am interviewing with is my #1 and I have built two strong relationships, each in each service area. For my high interest in Advisory, I can say, I always gravitate toward the headlines that have become the new hot topics that include, fraud, forensic accounting, and investigation. This is consistent with my very investigative and curious personality. However, on the other hand, understanding and learning the breakdown of a specific client’s company as I am involved in an audit interests me very much. The point is, what are the pros and cons for the two different services: Audit v Advisory. What is the opinion for a positive, fulfilling career in each service area, as public accounting is my interest for a lifetime? Am I hurting myself by letting the company choose where to put me by saying I am interest in BOTH opportunities?

To answer your last question – yes, it’s our feeling that you are marginalizing yourself by saying you’re interested in both practices. If you’re on the fence about which to join, other candidates that are more sure about their preference may have an edge over you. Make a choice for crissakes.

With that in mind, let’s break down a few pros and cons.

Pros

Audit – Your schedule is more predictable; less travel.

Advisory – Money is better; work is sexier; better reputation.

Cons

Audit – If you’re the type of person that is easily bored, then you will eventually get bored with auditing; auditing practices are bureaucratic nightmares – keeping up accounting and auditing rule changes; audit does not enjoy a sterling reputation.

Advisory – Hours can be unpredictable – you might work late nights for weeks (sometimes months) away from your home office or quite the opposite – you might find yourself with nothing to do for weeks at at time; the advisory practice is more susceptible to changes in the economy which means if things get bad, layoffs are more likely in advisory than in audit.

The real question is – what path do you want your career to take? You say that “public accounting is my interest for a lifetime.” Call us cynical but we’ll be shocked – SHOCKED! – if this is true in 3-4 years. If you really, really, really think that it is true, then audit is probably the choice for you. You’ll find a business line you like and if you’re ambitious and active within your firm, you’ll be on the partner track.

On the other hand since you say you’re drawn to fraud, forensics, investigative nature etc., we feel you should go with your instincts and go for advisory. Granted, Sam Antar will also tell you that you need the proverbial ironclad balls but those come in over time.

Anyone else faced with this dilemma? Anyone made the choice and got some input? Fire away.

Let’s Speculate About: The Oddly Similar Logos of PwC and The Gap

Caleb Newquist
October 8, 2010

Last month we learned about PwC’s new look to welcome that portrayed beauty and majesty of autumn. That and it reminded us something that Harry Pitfall might encounter if aliens landed.

Anyway, people have their opinions on the new look and Bob Moritz is okay with that as long as it doesn’t concern the color or shape.

The latest twist in this seemingly unending logo-mama drama was brough to our attention by a reader who saw an eery resemblance between ~~PwC~~ pwc’s new look at the new look of recently rebranded and ridiculed retailer The Gap.

Caleb,

Does is strike you as odd that soon after PWC changes their logo the GAP changes theirs to a similar style? Although Deloitte is currently GAP Inc. auditors, the company may be opinion shopping. Changing the company logo to look like their would be auditors’ is a surefire way to get the desired opinion.

This may be a total coincidence. However should GAP grab headlines in the style of the Universal Travel Group and hop over to PWC, at least now you won’t be surprised.

Our reader brings up an excellent point. We admit that the new logos aren’t identical but there’s more than a slight chance that they are brothers from another mother. So what’s the deal here? Maybe it is a coinky-dink. But then again, you would think that the cheap denim, khakis and plain t’s business would be thriving in this economy. If our reader is to be believed, Gap may be trying to find an auditor that’s willing to look the other way on [ideas on financial reporting chicanery are welcome]. And it just so happens that a certain professional service provider has also been recently taken some heat for their rebranding.

The only thing we can be sure of is that if Ernst & Young is serious about their makeover, they should resist the temptation to stick with squares.

Like we said, the motives here are not obvious and it’s imperative that we get to the bottom of this mystery, so that involves getting your ideas. Nothing is too crazy.

CPA Exam

How Much Harder Is AUD Going to Be in 2011?

Adrienne Gonzalez
October 8, 2010

Continuing with our previous posts on the 2011 CPA exam for FAR and BEC, we proudly present one heck of an Audit wrap up for those of you planning to take it next year.

Audit, unfortunately, is the one section that I think will be just a tad harder than it is this year but only in one small area. We’ll get to that in a minute.

Simulations – As with FAR and REG, Audit will contain 7 smaller simulation problems next year (called “simlets” or “task-based simulations”) instead of two large simulations. Written communication is gone and placed into BEC. Since AUD was the largest exam time-wise up until now, a half hour will be moved out of Audit and put into BEC. Now 4 1/2 hours, it will be cut down to 4. Since AUD is often one in which candidates run out of time even in 2010, it is all that much more important to learn important time management strategies to assure you do not run out of time.

MCQ – Multiple choice questions will make up 60 – 70% of your score while TBS (task-based simulation) problems will make up the remainder.

Research This is where Audit gets tricky and why I feel it is the only section that will be slightly harder in 2011 than it is now. Currently, research is just a tab buried in simulations and frankly not worth your time unless you have tons left and really love looking through the Code of Professional Conduct (or need something to copy for your written communication, though we would never recommend such a thing).

In 2011, research will be its own TBS with the same weight as other simulation problems (if graded). For FAR and REG this isn’t much of an issue as you only have the ASCs to dig through in FAR and just two sets of code for REG. But for Audit, you have a grand total of TEN different sets of code to search; the Code of Professional Conduct, PCAOB ASs, SASs, SSARS… you get the point. It wouldn’t hurt to try out the new research problems on the AICPA’s website here so you can get an idea of what you are up against. It is very similar to 2010’s research except that it is on its own and actually worth a couple points.

Ethics and Independence – Content-wise, professional ethics and independence are moved out of REG and into AUD (except those that pertain to tax practice, which will continue to be tested in REG) and international audit standards will be peppered in throughout. Planning the engagement will now make up 12 – 16% of problems whereas before it accounted for up to 28% of this section. Internal control is upped to 16 – 20% (from 12 – 18%). Audit procedures will get far less testing than in 2010, going from 32 – 38% of questions to 16 – 20%.

Hope that helps and see you on Tuesday for our last 2011 wrap up, Regulation!

Accounting News Roundup: Big Names Oppose Proposed Washington Tax; American Apparel Names Acting President; Oregon Gubernatorial Candidate Donates Home and Gets Burned | 10.08.10

Caleb Newquist
October 8, 2010

SEC Accuses CHiPs Actor, Others Of Securities Fraud [Dow Jones]
“In complaints made public on Thursday, the SEC alleges that the actor, Larry Wilcox, and more than a dozen other penny stock promoters engaged in a series of kickback schemevolume and price of microcap stocks and illegally generate stock sales.

Wilcox, who starred as Officer Jon Baker on the long-running television show “CHiPs”, lives in West Hills, Calif., and is president and chief executive of The UC Hub Group, according to an SEC complaint filed in U.S. District Court for the Southern District of Florida.”

Microsoft, Boeing, Amazon Line Up Against New Washington Tax [Janet Novack/Forbes]
“The Washington State fight over whether to impose a new income tax on well-to-do residents heated up Wednesday, as the group opposing the tax released a list of employers that have joined the anti-tax cause. Companies on the list include Microsoft, Boeing, Amazon, Weyerhaeuser and Safeco Insurance.

The tax, which will appear as Initiative 1098 on the state’s November ballot, would impose a 5% tax on income of more than $400,000 per couple and a 9% levy on income exceeding $1 million per couple.”

Rep. Levin: Fate of Bush tax cuts unknown [On the Money/The Hill]
This does not sound good: “The Senate is expected to move first on the issue, but Levin said even that was not certain.

‘It’s preferable that the Senate act first because we’ve seen that if they can’t act first they won’t act second because the Republicans block it and don’t provide the 60 votes,; he said, adding, ‘I think we’ll have to wait and see.’ “

American Apparel names Tom Casey as acting president [Reuters]
Tom Casey just left the terminal case known as Blockbuster in August.

SBA Loans Jump, Despite Unsteady Year [WSJ]
“Small-business lending still hasn’t bounced back to pre-recession levels. But despite a rocky year, the number of loans backed by the Small Business Administration jumped about 30% in 2010.

The agency, which ended its fiscal year Sept. 30, says it approved $16.84 billion, or 54,826 small business loans, in the past 12 months. That’s up from fiscal 2009, when the SBA backed about $13.03 billion during the depths of the credit crunch. In 2007, the agency backed about $20.61 billion.”

Oregon Gubernatorial Race Roiled by Candidate’s Charitable Deduction for Donation of Home to Fire Department [TaxProf Blog]
You try and do something nice…

FASB Advances EITF Proposals on Goodwill, M&A [A&A Update/Compliance Week]
“The Financial Accounting Standards Board is proposing new updates to the Accounting Standards Codification around goodwill write-downs, business combinations, and revenue recognition for health care entities based on recommendations from its Emerging Issues Task Force.

In the proposal titled Intangibles – Goodwill and Other (Topic 350): How the Carrying Amount of a Reporting Unit Should Be Calculated When Performing Step 1 of the Goodwill Impairment Test, FASB and the EITF want to settle on one starting point for all companies to follow in deciding if goodwill needs to be written down.”

U.A.E. Drops Threat to Suspend BlackBerry [NYT]
Your vacation is back on.

Quote of the Day

Off-Balance Sheet Accounting 2.0

Caleb Newquist
October 8, 2010

“They will help investors to better understand off-balance sheet risks, and to alert them to the possibility of so-called window dressing transactions occurring at the end of a reporting period.”

~ Sir David Tweedie talking up the new rules that were published by the IASB today.

Ron Howard’s Little Brother Stars in an Fairly Realistic Reenactment of a Tax Hike Strategy Session

Caleb Newquist
October 8, 2010

[via Don’t Mess with Taxes]

Future CFOs, Partners Best Not Check Integrity at the Door

GoingConcern
October 8, 2010

The following post is republished from AccountingWEB, a source of accounting news, information, tips, tools, resources and insight–everything you need to help you prosper and enjoy the accounting profession.

A strong moral compass can give high-potential managers a leg up the career ladder, according to the results of a recent survey.

One-third of chief financial officers (CFOs) interviewed said that, other than technical or functional expertise, integrity is what they look for most when grooming future leaders. Interpersonal and communication skills also ranked high, cited by 28 percent of respondents.

The survey was developed by Robert Half Management Resources, a provider of senior-level accounting and finance professionals on a project and interim basis. The survey was conducted by an independent research firm and includes responses from more than 1,400 CFOs from a stratified random sample of U.S. companies with 20 or more employees.

CFOs were asked, “Other than technical or functional expertise, which one of the following traits do you look for most when grooming future leaders at your organization?”

Their responses:
• Integrity – 33%
• Interpersonal/communication skills – 28%
• Initiative – 15%
• Ability to motivate others – 12%
• Business savvy – 10%
• Other/don’t know – 2%

“History has shown time and time again the importance of ethics in business – even a single lapse in judgment by one employee can significantly affect a company’s reputation and its bottom line,” said Paul McDonald, senior executive director of Robert Half Management Resources. “Leaders who are principled and forthright inspire this same behavior in their teams, creating a culture in which integrity is a core value.”

McDonald pointed out that communication skills also are requisite as executives take on greater responsibility.

“Especially during difficult periods, managers must be able to promote open, two-way communication with their teams,” McDonald said. “Executives in companies that have moved successfully through the downturn understand the importance of listening intently to feedback from employees and are always on the lookout for this skill in potential leaders.”

News

There Are Some Cranky McGladrey Mofos in Minneapolis

Caleb Newquist
October 7, 2010

Last week McGladrey announced the promotion of 21 lucky ducks to the big kids’ table. Mining the comments, you would find some indication that even with the 21 newbies, the number of partners is probably a net negative due to “laid off and departing partners.”

We received a tip recently that seems to echo these thoughts, telling us that a number of managers and partners have left the Minneapolis office, including a “head partner.”

We asked around and discovered through another source that this “head partner” was a gentleman by the name of Will Roche, a veteran of the firm:

I am not saying but just saying no one in is happy in Minneapolis. Will Roche was forced out after 34 years

And through another non-McG source we were able to confirm that Mr. Roche is no longer with the firm. So! Maybe it’s a simple case of out with the old, in with the new at Mickey G’s? If that’s the case, is C.E. Andrews next? Dude is pushing 60. Discuss below.

Will Ernst & Young Be the Next Firm to Get a Makeover?

Caleb Newquist
October 7, 2010

[caption id="attachment_18945" align="alignright" width="150" caption="No more square?"]

[/caption]

It sounds like it!

Judging by the article over at Marketing Week ideas are being kicked around and since Audits the Emmys!” Perhaps, “Zitor works for us!” Or simply, “Our opinion indicated that Lehman’s financial statements for that year were fairly presented in accordance with GAAP!”

Even a more important questions – should they incorporate a mascot? Maybe an E&Y Phanatic? A live animal may do the trick. Or this.

Let’s hear some ideas.

Ernst & Young looks to stand out among “big four” [Marketing Week]

News

Local CPA Ups Ante on Client Service

Caleb Newquist
October 7, 2010

What have you done for your clients lately? Worked through the night to meet a big deadline? Great job. Attended a bar mitzvah? That’s nice. Saved them oodles of dough by navigating a tricky divorce? You’re a rock star.

But until you’re willing to part with a kidney (or better), you’re a basically a chump compared to Jeff Waters.

You see, Jeff likely does everything that most CPAs do – bend over backwards for idiot clients; helps them deal with nosy IRS agents; explains why an incompetent Congress is likely to bungle the estate tax and so on and so forth.

But when his clients, the Fitzgeralds, were in one day chit-chatting about 1099s, a more serious problem (failing kidney serious, not heart attack serious) came up:

The week before standing in Waters’ office, the Fitzgeralds were told a kidney was available for [their daughter] Kelly, but at the last minute, the transplant had to be cancelled because the kidney turned out to be damaged.

“I thought, any problem I have pales in comparison to something like that,” Waters remembers. “I told (Fitzgerald), ‘I can’t even imagine you’re here today doing taxes when something like that happens.'”

Fitzgerald told him, “Well, we just learned to never get our hopes up. We just need to find another B positive donor.”

“That’s when it clicked,” Waters said. “I knew from my LifeSource Donor Card that I was B positive.”

And you can take it from there. Of course Jeff gave his kidney away. All he had to do was put on a cape and re-re-convince some pushy medical staff, “Waters says medical staff repeatedly told him not to feel pressured to go through with the transplant,” and like we said, he went under the knife and made it happen.

We realize not everyone is jumping at the opportunity for voluntary surgery and some are bound by religious whathaveyous but just think about it. Do you really need two kidneys?

Wheaton Accountant Does Taxes, Donates Kidney for Client [Wheaton Patch]

Career Center

Passionate Public Accountant Wants to Know If He Has What It Takes to Join PwC or Deloitte

Caleb Newquist
October 7, 2010

Today’s edition of “Accounting Career Couch” brings us an experienced and passionate auditor who has been out out public accounting for spell, getting ready to back in the game. He’s looking at PwC or Deloitte but is worried that his non-Big 4 background will hold him back.

Have a question about your career? Concerned that your CEO may be making debatable statements and want to disavow yourself from the comments? Are you a CFO that’s going through auditors like Don Draper goes through dames and n? Shoot us an email at advice@goingconcern.com and we’ll dispense some wisdom.

Back to our passionate public accountant:

I worked for 6 years at a national top ten firm (Non Big 4, Non Grant Thornton, Non Mcgladrey, Non BDO). I have a lot of passion for public accounting, and really loved the work. Last April I feel victim to the downsizing present at our firm and was let go. I just made manager the year before, and reviews were very solid, I transferred to the Mergers and Acquisitions group from Audit and we all know what happened to that group. 80% of our group was terminated and we were not allowed the option to transfer back to audit.

I have been working contract work for the past year and a half, and am looking re-enter public accounting. I am looking at PWC and Deloitte as they are hiring for audit positions but am concerned that I might not fit in and my skill set won’t be advanced enough to adapt to their methodology.

I have managed audits of companies which range from 10 million to a 1 billion, both public and private. I am also concerned that the culture might be too cut throat and a new person would be thrown to the wolves. My firm was sophisticated in terms of our documentation but not as technical as I imagine the big four would be given a lot of our clients were private.

Any thoughts from your readers here?

“Passion” and “public accounting” are not words that often collide in the same sentence, so we obviously have a special breed on our hands here. Let’s do our best, shall we?

Your experience sounds pretty solid. A top ten firm will provide good experience and while methodologies at the Big 4 firms are more rigorous, your background should be good enough that you’ll be able to adjust accordingly. Also, your M&A experience is something that many Big 4 auditors won’t have, so that’s also an advantage.

You’re shooting for PwC and Deloitte, which many will argue are the top dogs. Personally, we think you’re capable of making in there but not with your current attitude. You sound like you’re selling your experience short just because it wasn’t with a Big 4 firm. If you have managed audits of the size you claim and have the M&A experience both of these firms will give you a serious look. Big 4 firms have plenty of private clients that your experience would be perfect for.

As for your concern about the cutthroat environment, we feel it’s a little overboard. Will it be competitive? Yes. Will there be unscrupulous people that will step over their own grandmother to get ahead? Of course. But do you know of any company that doesn’t have people like this? It really depends on the market you’re in; if you’re in NYC, Chicago, L.A. San Fran, etc. things will drastically more cutthroat than if you’re in Oklahoma City or Portland. If you’ve navigated politics and assholes before, you can do it again.

Regardless, when you meet with the firms talk up your experience, passion and your accomplishments without being self-deprecating. Learning a new methodology and culture isn’t like learning Mandarin. New jobs always mean adjustments and if you’re determined and ambitious, there’s no reason you can’t kick ass inside either PwC or Deloitte.

News

Universal Travel Group, Who Appears to Be ‘Partially a Fraud,’ Has Gone Through a Shocking Number of Auditors, CFOs

Caleb Newquist
October 7, 2010

Yesterday, Henry Blodget wrote about Universal Travel Group’s auditor – Goldman Kurland Mohidin, LLP – quitting two weeks after Bronte Capital’s John Hempton issued a ress explained that the whole damn company was a fraud.

This, of course, resulted in a reactionary measure by UTA, who denied all the allegations immediately and announced that they were looking to sue Hempton because, seriously, who likes getting their feelings hurt?

So that’s the backstory. A little bird suggested to us that maybe we should look into the company’s past to see just how many auditors they’ve burned through and maybe check out how many CFOs they’ve gone through also. WELL!

Auditors
First we went back to the 10-K filed on March 31, 2008 and discovered that on June 23, 2006, the company dismissed Moore & Associates, Chartered:

On June 23, 2006, we dismissed the firm of Moore & Associates, Chartered (“Former Auditor”), which had served as our independent auditor until that date. The Former Auditor was our auditor prior to the acquisition of control of our Company by Xiao Jun.

On June 23, 2006, we retained Morgenstern, Svoboda & Baer, CPA’s, P.C. to serve as our principal independent accountant.

This seemed to be a pretty good call on UTA’s part since it turned out that Moore & Associates was issuing bogus audit reports. No cause for concern at this point.

The relationship with Morgenstern, Svoboda & Baer appeared to be going on swimmingly but ultimately, for reasons unbeknownst to all, it didn’t work out. MS&B resigned on June 30, 2009 to make way for Acqavella, Chiarelli, Shuster, Berkower & Co., LLP:

On June 30, 2009, our prior independent registered public accounting firm, Morgenstern, Svoboda & Baer CPA (“Morgenstern”) resigned and on the same day, we appointed Acqavella, Chiarelli, Shuster, Berkower & Co., LLP (“ACSB”) as our new independent registered public accounting firm.

Similar to their predecessors, ACSB & Co. was humming along just fine, getting ratified in the recent preliminary proxy statement filing until they were up and fired on September 1st:

On September 1, 2010, our current independent registered public accounting firm, Acqavella, Chiarelli, Shuster, Berkower & Co., LLP (“ACSB”), was dismissed and on the same day, we appointed Goldman Kurland Mohidin (“GKM”) as our new independent registered public accounting firm.

Anyone weirded out yet? Does appointing a new auditor the same day that the previous quit strike anyone as panicky? Maybe that’s just us. Anyway, so GKM spends four weeks on the job until:

On September 29, 2010, we received a letter dated September 28, 2010 from our current independent registered public accounting firm, Goldman Kurland Mohidin, LLP (“GKM”), informing us that they had resigned as our independent registered public accounting firm effective with the commencement of business on September 27, 2010. No reason was given as to the cause for their resignation.

Windes & McClaughry Accountancy Corporation is new auditor and has not quit at the time at the time of this writing. They way things seem to be picking up, however, it could be any minute. So for those of you not counting, that makes five different auditors going back to June 23, 2006. Probably not a record but it certainly puts the auditor musical chairs at Overstock.com to shame.

CFOs
The CFO situation is less exciting but there’s enough going on that should make any investor run screaming for the hills. Xin Zhang was appointed CFO as of July 12, 2006. After an eternity (by UTA standards anyway), on February 17, 2009, UTA appointed 27 year-old Jing Xie as CFO. Now maybe this Jing is a financial wizard but this seems, at best, fishy.

Xie lasted exactly six months, resigning on August 17th and Yizhao Zhang was appointed to the big chair the same day, again because there was no time to waste.

Yizhao was on quite a roll but then he resigned on August 16th for “personal reasons” (freaked the hell out?) and the company promoted the crafty veteran Xie back to his old position (on an interim basis). This rivals the CFO shuffle that was going on at Lehman.

So quite the riddle. Quite the riddle indeed. Maybe Hempton and Blodget are on to something with this whole “it’s a complete sham” notion. Or maybe UTA is just a bunch of jerks. Theories are welcome at this time.

Auditor Quits At Universal Travel Group (UTA) — The NYSE-Listed Company That Looks Like A Fraud [BI]

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